Correlation Between IMPERIAL TOBACCO and Pick N
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Pick N at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IMPERIAL TOBACCO and Pick N into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Pick n Pay, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Pick N and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IMPERIAL TOBACCO with a short position of Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Pick N.
Diversification Opportunities for IMPERIAL TOBACCO and Pick N
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and Pick is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay and IMPERIAL TOBACCO is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IMPERIAL TOBACCO are associated (or correlated) with Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Pick N go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Pick N
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 9.48 times less return on investment than Pick N. But when comparing it to its historical volatility, IMPERIAL TOBACCO is 27.75 times less risky than Pick N. It trades about 0.11 of its potential returns per unit of risk. Pick n Pay is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 208.00 in Pick n Pay on December 4, 2024 and sell it today you would lose (65.00) from holding Pick n Pay or give up 31.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Pick n Pay
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Pick n Pay |
IMPERIAL TOBACCO and Pick N Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Pick N
The main advantage of trading using opposite IMPERIAL TOBACCO and Pick N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Pick N can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pick N will offset losses from the drop in Pick N's long position.| IMPERIAL TOBACCO vs. PATTIES FOODS | IMPERIAL TOBACCO vs. GREENX METALS LTD | IMPERIAL TOBACCO vs. Aluminum of | IMPERIAL TOBACCO vs. Maple Leaf Foods |
| Pick N vs. Infrastrutture Wireless Italiane | Pick N vs. Mobilezone Holding AG | Pick N vs. Singapore Telecommunications Limited | Pick N vs. Verizon Communications |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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